Trends Reshaping the BPO Marketplace | Sherpas in Blue Shirts

The BPO segment of the services marketplace has been undergoing significant change in its growth trends. As we lean into 2015, here’s a look at how and where BPO is experiencing the biggest growth.

Industry-specific offerings lead growth, and horizontal BPO growth comes from newer segments. 

Industry-specific segments

The industry-specific segments are growing significantly faster than the traditional horizontal offerings. For example, our study of the three-year CAGR of various segments reveals that:

Industry-specific Horizontal
Capital markets – 20-22% FAO – 8-10%
Insurance – 14-16% Contact centers – 6-8%
Banking – 14-16% Multi-process HRO – 2-4%

This data underlines the shift that I’ve commented on in previous blogs. Customers not only expect industry expertise and relevant industry solutions but also favor them over the horizontal segments of generic process-oriented offerings.

BPO trends

Fast-growth process-oriented segments

Nevertheless, some process-oriented segments are growing very quickly. Examples of segments on the adoption fast track include:

  • Analytics BPO segment – 30-32%
  • RPO segment – 16-18%

Go-to-market strategy

Although most service providers now structure and deliver a horizontal offering, they bring it to market to their vertical orientation. For example, they sell their analytics offering through their manufacturing, retail or healthcare verticals. This allows the horizontal segment to capture the growth benefits of the vertical orientation while getting the scale benefits of the horizontal delivery model.


Another factors shaping BPO growth for 2015 will be adoption by buyer size. Our research tracking new BPO contracts points to this trend. For example, in Banking BPO contracts signed as of December 2013, midmarket customers signed 57% of the contracts in 2011-2013, a sizeable increase over 43% signed up to 2010.

Influence factor

Underpinning the shift to more industry-focused and customer-focused offerings, is another shift I’ve blogged about several times — the shift of influence from the central buying organizations to the business units. This trend has been a major factor in BPO adoption during 2014 and will continue to exert pressure that creates both upticks and downward trends in BPO for 2015.

Photo credit: Andy

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